Dunleavy calls special session amid dividend debate

Alaska House Speaker Bryce Edgmon, center, speaks to reporters after the House failed to accept a Senate rewrite of a crime bill, Tuesday, May 14, 2019, in Juneau, Alaska. Also pictured are state Reps. Matt Claman, left, and Chuck Kopp.
Becky Bohrer
AP Photo

JUNEAU, Alaska

Alaska Gov. Mike Dunleavy called lawmakers into a special session after the regular session ended at the constitutional deadline Wednesday without resolution on its biggest issues: crime, the budget and the dividend residents receive from the state's oil-wealth fund.

The special session is scheduled to begin Thursday morning in Juneau. A conference committee on a sprawling crime package is expected to meet first thing.

Dunleavy in a statement said Alaskans "have every right to be disappointed by the legislature's inaction," but said they also expect lawmakers to act on pressing state issues.

"As a result, I am calling a 30-day special session to give lawmakers another opportunity to complete the critical tasks they were sent to accomplish by the People of Alaska," he said.

Unlimited Digital Access: Only $0.99 For Your First Month

The day was marked by an afternoon House floor session with bills including board extensions and a measure intended to allow the Alaska State Fair to continue selling alcohol. There were no public meetings on the crime package or the state operating budget. Also undecided was how to handle the dividend paid to residents from the Alaska Permanent Fund.

The House and Senate each held late-night floor sessions, mainly to handle a small number of bills, like the fair bill, that needed concurrence for final passage.

House Speaker Bryce Edgmon, in a statement, said the decisions lawmakers face on the permanent fund, crime and budget "are simply too important to rush."

"We have worked hard to achieve meaningful compromise, and we are committed to continuing our work to get these monumental decisions right for Alaska," the Dillingham independent said.

Heading into the day, House and Senate negotiators had nearly reached agreement on an operating budget but a decision remained on the divisive issue of what to do about the dividend.

Dunleavy, speaking with reporters, made clear his expectation that residents receive a full dividend from Alaska Permanent Fund earnings after three years of capped payouts.

"We will use all the tools available to us to make sure that that law is followed," said Dunleavy, who has veto powers and the ability to call special sessions.

Senate President Cathy Giessel said members were thinking about what Dunleavy wants for the dividend and how to do that but also what the dividend program could look like going forward.

"There's only so much money, and we're trying to figure out how best to share the wealth with citizens," the Anchorage Republican said. "It is something that has been a legacy in this state, and we don't want it to be something that cripples the state and the ability to provide services."

The Senate, in its version of the budget, proposed a full dividend payout, which would equate to checks estimated to be around $3,000 each and cost $1.9 billion. But that proposal left a $1.2 billion deficit that would need to be filled, and some members said they saw the full payout as a negotiating point. The House didn't address the dividend in its version of the budget but leaders had said they planned to address it later.

The dividend calculation has not been followed the last three years amid ongoing debate over a persistent budget deficit. Lawmakers who agree with Dunleavy's call for a full payout argue that unless the law is changed, the calculation should be followed. Others consider the calculation outdated and unsustainable.

The rub comes with the Legislature's decision last year to use permanent fund earnings — long used to pay dividends — to help cover government costs amid disagreements over budget cuts and taxes and a continued drawdown of savings. Lawmakers also last year sought to limit what could be taken from fund earnings to pay for dividends and government. Alaska has no statewide sales or personal income taxes, and Giessel said, "at this point, we don't see that people want a tax, either."

The earnings reserve account was valued at $19 billion at the end of April, and Dunleavy has argued the money is there to pay full dividends. But critics worry about overspending from the reserve.

There has been discussion, also unresolved, about taking billions from earnings, which are spendable, and putting them into the fund's principal, which has constitutional protections.

Both the House and Senate Rules committees introduced resolutions calling for a special session to address use of permanent fund earnings. Neither was taken up.

House and Senate budget negotiators as part of their deliberations agreed to advance funding for schools for the fiscal year starting July 1, 2020. That is similar to action taken by lawmakers last year to fund schools for the upcoming fiscal year that Attorney General Kevin Clarkson has argued is unconstitutional.

Dunleavy said he expected action on the budget, crime package, dividend and education funding.

He has called for lawmakers to include in the budget school funding. Legislative leaders have balked, standing behind their actions last year in approving money for the coming year as valid.

Under a law passed last year, with the constitutional session limit passed, legislators would not be eligible to receive daily per diem allowances until a fully funded operating budget is passed. All but the Juneau legislators have been eligible for the roughly $300 a day allowance.